Exam 1: Managerial Accounting and Cost Concepts

A contribution format income statement for a merchandising company organizes costs into two categories-cost of goods sold and selling and administrative expenses.

A partial listing of costs incurred at Falkenberg Corporation during October appears below: Required: a. What is the total amount of product cost listed above? Show your work. b. What is the total amount of period cost listed above? Show your work.

Which of the following costs is classified as a prime cost?

Farmington Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. Production volume 6,000 units 7,000 units Direct materials \ 195,000 \ 227,500 Direct labor \ 113,400 \ 132,300 Manufacturing overhead \ 913,200 \ 931,700 The best estimate of the total cost to manufacture 6,300 units is closest to:

A sunk cost is:

Frank Company operates a cafeteria for its employees. The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria are given below: Assume that the relevant range includes all of the activity levels mentioned in this problem. Using the high-low method of analysis, the variable cost per meal served in the cafeteria would be estimated to be:

The contribution format is widely used for preparing external financial statements.

When the activity level declines within the relevant range, what should happen with respect to the following?

Frank Company operates a cafeteria for its employees. The number of meals served each week over the last seven weeks, along with the total costs of operating the cafeteria are given below: Assume that the relevant range includes all of the activity levels mentioned in this problem. Assume that the cafeteria expects to serve 1,850 meals during Week 8. Using the high-low method, the expected total cost of the cafeteria would be:

In a traditional format income statement for a merchandising company, the selling and administrative expenses report all period costs that have been expensed as incurred.

Which of the following is an example of a cost that is variable with respect to the number of units produced?

Davis Corporation has provided the following production and total cost data for two levels of monthly production volume. The company produces a single product. The best estimate of the total monthly fixed manufacturing cost is:

Tolden Marketing, Inc., a merchandising company, reported sales of $2,861,800 and cost of goods sold of $1,492,400 for December. The company's total variable selling expense was $77,900; its total fixed selling expense was $70,600; its total variable administrative expense was $98,400; and its total fixed administrative expense was $193,400. The cost of goods sold in this company is a variable cost. The gross margin for December is:

At a sales volume of 30,000 units, Carne Company's total fixed costs are $30,000 and total variable costs are $45,000. The relevant range is 20,000 to 40,000 units. If Carne Company were to sell 40,000 units, the total expected cost per unit would be:

At a sales volume of 35,000 units, Cly Corporation's sales commissions (a cost that is variable with respect to sales volume) total $525,000. To the nearest whole dollar, what should be the total sales commissions at a sales volume of 36,100 units? (Assume that this sales volume is within the relevant range.)

In a manufacturing company, direct labor costs combined with direct materials costs are known as:

Product costs are recorded as expenses in the period in which the related products are sold.

Nieman Inc., a local retailer, has provided the following data for the month of March: The cost of goods sold for March was:

In April direct labor was 70% of conversion cost. If the manufacturing overhead for the month was $42,000 and the direct materials cost was $28,000, the direct labor cost was:

Younger Corporation reports that at an activity level of 8,700 units, its total variable cost is $653,109 and its total fixed cost is $658,416. Required: For the activity level of 8,800 units, compute: (a) the total variable cost; (b) the total fixed cost; (c) the total cost; (d) the average variable cost per unit; (e) the average fixed cost per unit; and (f) the average total cost per unit. Assume that this activity level is within the relevant range.